Google growth continued to slow in Q2 2015, as paid search ad spending increased by just 12% YoY, down from 24% a year earlier. Google click traffic growth fell by 1%, as advertisers continue to face a higher average cost-per-click (CPC). Advertisers paid significantly higher costs to appear for their own brand names on Google in Q2 2015, seeing on average a 40% higher CPC. While Google has officially reported falling CPCs year-over-year, their numbers are reduced by low YouTube CPCs; Merkle|RKG data shows that Google-specific paid search CPCs rose 13% over last year in Q2.

Bing Ads growth also slowed from last quarter, but is still strong compared to last year. Paid search ad spending on Bing increased by 27% from Q2 2014, driven by a 24% increase in ad clicks. Bing ad CPCs grew by just 2%.

Meanwhile, Facebook ad spend and CPCs continue to rise; advertisers spent 69% more on Facebook ads, including Facebook Exchange (FBX), in Q2 this year compared to 2014. Both click volume and CPC increases contributed to the overall increase in investment, with the latter up 30% year-over-year.

Google, Yahoo, and Bing Continue to Jockey for Search Share

With Bing Ads striking a deal to replace Google as the default search provider for AOL, Merkle|RKG data shows that AOL produced 1% of overall Google search ad clicks in Q2 2015, a sizeable portion of the 8% share of Google clicks that search partners produced overall. This follows Google’s loss of default search status on Firefox in Q4 2014, which resulted in it losing 2% of the overall U.S. search market. Also at stake is Google’s status as the default search provider for the Safari browser and iOS devices, which produced 35% of search ad clicks in Q2 2015.

Yahoo’s new search platform, Gemini, now accounts for 15% of total Bing and Yahoo paid search clicks across all devices, among advertisers who have adopted the program. Gemini traffic share jumped 2.2 points from April to May following the announcement that Yahoo could begin serving Gemini ads for desktop traffic. Yahoo also recently confirmed that it has tested running Google search ads on its domains; Merkle|RKG data finds that Google search ads produced 31% higher conversion rates than Bing Ads in Q2.

Although it has avoided Google Product Listing Ads (PLAs), Amazon’s presence in Google text ad auctions has increased significantly. Over the last three years, Amazon’s text ad impression share has nearly doubled across multiple retail industries.

Amazon’s own product ad format continues to see success, with advertiser revenue from Amazon Product Ads up 85% year-over-year. Advertisers running both Amazon Product Ads and Google PLAs saw Amazon drive revenue equal to 17% of that driven by Google PLAs in Q2, nearly double the 9% figure from Q2 of last year.

Google Buy Button “Imminent”; Merkle|RKG Data Offers Context

As Google’s buy button functionality for PLAs on phones appears imminent, Merkle|RKG found phone revenue-per-click running 58% lower than desktop in Q2 2015. By clicking the buy button, users would be directed to a Google website where they could complete their purchase. Doing so may ease the mobile buying process, as users could use Google-saved information to purchase and would be guaranteed a mobile-friendly experience. However, some advertisers have expressed concerns over the ability to cross-sell and upsell with Google handling the customers experience; Merkle|RKG finds that PLAs are already producing 13% smaller orders than text ads.

Other Q2 Highlights Include:

Paid Search:

Overall paid search spending grew 14% year-over-year (versus 17% in Q1). Clicks were up 3% while CPCs were up 11%.

Phones and tablets produced 41% of paid search clicks and commanded 31% of spending. Tablet click growth has slowed to just 1% year-over-year, while phone clicks increased 35%.

Merkle|RKG’s data on the mobile-friendliness of Fortune 500 companies has been cited in Fortune‘s article “What Google’s Mobilegeddon is (and why you should care)”. The article discusses the mobile algorithm update Google released on April 21, 2015, which changes how mobile organic search results are ranked. As illustrated by the recent Digital Marketing Report (Q1 2015), many companies’ websites are not optimized for the change:

According to marketing agency Merkle/RKG, as of early April, 46% of Fortune 500 companies and 29% of the top 500 retail sites had not received Google’s “mobile-friendly” designation.

In two pieces about Google’s April 2015 mobile algorithm change, the Wall Street Journal cited research from Merkle|RKG’s Digital Marketing Report (Q1 2015) and Director of Research Mark Ballard. The pieces explain that this algorithm change affects the way Google ranks websites in mobile organic search results by making the mobile “friendliness” of a webpage a direct ranking factor. As a result, many websites have scrambled to meet Google’s criteria for mobile friendliness.

According to research by digital marketing agency Merkle | RKG, 46% of Fortune 500 companies and 25% of top retailers did not have websites with “mobile-friendly” designations from Google at the beginning of April.

Key themes from Merkle|RKG’s Q1 2015 report include divergent performance trends for Google and Bing, highlighted by a stall in Google click growth and a continued increase in Bing Ads traffic. Mobile devices also continue to see an increase in traffic for both paid and organic search channels. Meanwhile, Google’s algorithm update will take “mobile-friendliness” into account, which may significantly impact mobile search results and cause major brands without mobile-friendly sites to see a decrease in ranking.

Google Click Growth Drops to 0.2% Year-Over-Year, Down from 12% Growth in Q4 of 2014

Spending growth on Google decelerated from 19% in Q4 2014 to 13% in Q1 2015, as click traffic grew by just 0.2% year-over-year and cost-per-click (CPC) rose by 13%. Google’s click growth was negatively impacted by several factors, including slowing tablet growth, the maturation of the Product Listing Ad (PLA) market, as well as the loss of Google’s default search provider status on Firefox, which resulted in a 2% shift of U.S. search traffic share to Yahoo.

However, Merkle|RKG data suggests the deceleration in growth may also be a consequence of Google showing fewer ads for each search query, resulting in fewer ad impressions available to advertisers (down 17% year-over-year in Q1). The decision to show fewer ads would likely result in a lower total ad click-through-rate (CTR) for Google, but the move could be revenue-positive if it drove more of the remaining traffic to higher-priced ads. Merkle|RKG data shows that CPCs rose 13% in Q1, while first page minimum bid estimates grew by a factor of between two and three over the past year. More »

Data and charts from Merkle|RKG’s Digital Marketing Report (Q1 2015) were featured in a Business Insider article about Google’s April 2015 update for mobile organic search. The article, “Google just made a huge update that could affect millions of businesses. Here’s what you need to know,” explains how important it is to ensure websites meet Google’s standards for mobile “friendliness.” However, many websites have a long way to go:

More than 45% of Fortune 500 companies and 29% of Internet Retailer 500 sites weren’t mobile friendly by early April, only weeks ahead of the update, according to research from digital marketing agency RKG Merkle.

Merkle|RKG chart on Fortune 500 companies’ websites featured in Business Insider

February 2, 2015, Charlottesville, VA – Search and digital marketing agency, Merkle | RKG released its second annual Digital Bowl Report, evaluating Super Bowl advertisers’ digital marketing efforts. This year, newcomer Wix and longtime sponsor Bud Light took first and second place, respectively. The two brands outshined everyone else in almost every category, taking top honors for truly integrated marketing. Loctite, another big game rookie, was a top performer in social. Doritos had great SEO, and big names Coca-Cola and Mercedes-Benz rounded out the winners in Display.

The Digital Bowl Report examines the array of digital channels that brands have at their disposal: social media, SEO, paid search, display advertising, and email marketing. Wix got all the little digital things right. With a great paid search and organic search strategy implemented prior to the big game, Wix was ready to corral users looking for relevant content. The brand also showed up on game day with great social content, engagement, and conversation throughout the game. Coming in second, Bud Light locked down its presence at the top of search results with focused ads, making up for a tepid social presence. The brand excelled in display marketing, running pre-roll ads on super bowl commercials and executing premium display buys across the web during the game to stay in front of users on their second screens in real-time.

The Super Bowl is advertising’s biggest day, with media costs increasing every year. “The day after the big game, from water coolers to the halls of Madison Avenue, everyone will be talking about the funniest or the most touching ad, but those measures are all subjective. We wanted to take a look at harder metrics, at the efforts which really show whether a brand is prepared to compete in the digital space,” said Dalton Dorné, CMO, Merkle | RKG. “If you’re going to spend $4.5 million on a thirty-second spot, you better make it count.”

In December, Yahoo became the default search option for Firefox in the US, supplanting Google after its ten-year run. Accounting for the percentage of search traffic coming through Firefox along with the switchback rates of users opting to go back to Google, Yahoo will end up gaining about 2% of U.S. paid search clicks. With rumors that the door is open for Yahoo or Bing to become the default search engine for Apple Safari in 2015 – which accounts for almost half of all paid search traffic – the result could be a shift of more than 10% of search market share away from Google.

Google’s Product Listing Ads (PLAs) also face competition from Amazon Products Ads and Bing Product Ads. Both Bing and Amazon’s product ads are growing at a faster rate than Google’s, with Amazon’s ads generating revenues for participating retailers that were 19% the volume of PLAs, up from just 8% a year earlier. Bing Product Ad share of total Bing traffic doubled from Q3 to Q4 and is now at 7% and contributing to strong overall Bing growth.

Despite these developments, Google remains the dominant search engine. Google’s search ads converted 43% better than Bing Ads, and had a 39% higher average click-through-rate. Google also leads in mobile search, with 40% of Google search ad clicks coming from phones and tablets, compared to 36% for Bing Ads.

Beginning and End of Holiday Season See Strong Growth for Retailers; Mobile Plays Larger Role in Holiday Traffic

For retailers running paid search campaigns, the 2014 holiday season started and ended on high notes with sales growth ultimately coming in at 20% year-over-year. After impressive Thanksgiving sales growth of 37% and Black Friday growth of 29%, things cooled off a bit, echoing recent holidays past.

By mid-December, cumulative sales growth had slipped to 16%, but advertisers saw very strong last-minute shopping numbers, particularly in the week before Christmas when many paid search programs achieved sales growth of over 40%.

As expected, mobile devices played a larger role in driving traffic this season as phones and tablets combined to generate 45% of paid search clicks on Thanksgiving and 51% of paid search clicks on Christmas. For the full fourth quarter, mobile devices drove 39% of paid search traffic. More »

Forbes quoted Merkle | RKG’s Director of Research, Mark Ballard, in an article about why Google’s search loss share to Yahoo isn’t that signficant. Forbes contributor Robert Hof explains that the market share shift is largely a result of Yahoo replacing Google as the default search engine on Firefox browsers. He then questions the lasting effect this change will have, as users may opt to go back to Google. He writes:

Actually, it’s more a question of how many Firefox users will switch back. Because it’s apparent that some already have. According to numbers crunched by Mark Ballard, director of research at [Merkle | RKG], writing on the website Search Engine Land, Yahoo may already have peaked in market share.

And there’s even less of an issue when it comes to the bottom-line impact. “We have seen a dip in Firefox’s share of total paid search traffic since the beginning of December,” wrote Ballard. “We could very well see this reverse itself soon, but it could also be a reflection of a deadweight loss, of sorts, that advertisers are experiencing just from Google being better at serving ads than its competition.”

Data from RKG’s Q3 Digital Marketing Report was featured in a Search Engine Land article detailing tablet and smartphone spending trends within PPC and SEO.

“Skepticism about the value of mobile search does appear to be waning, however. In its third quarter report, search firm RKG noted that after holding down smartphone bids in 2013 in order to improve ROI for its predominantly U.S.-focused e-commerce advertisers, mobile CPCs rose sharply (27 percent year-over-year) and ad spend on smartphones jumped 117 percent.

While still accounting for just a fraction of overall conversions, smartphone-attributable conversions rose 17 percent after RKG factored in cross-device conversions. The firm also saw a surge in mobile search traffic from the Bing Yahoo network.”

Charlottesville, VA (November 14, 2014) – RKG today announced it ranked #268 on Deloitte’s Technology Fast 500™, a ranking of the 500 fastest-growing technology, media, telecommunications, life sciences, and clean technology companies in North America. 2014 marks the fourth consecutive year RKG has made the list. Award winners were selected based on percentage fiscal year revenue growth from 2009 to 2013, during which time RKG grew by 362%.

RKG’s CEO, George Gallate, credits the company’s powerful proprietary technology, quality staff, and industry-leading thought-leadership with its sustained growth. He said, “We have consistently stayed at the forefront of the digital marketing industry, providing innovative and lasting solutions to help our clients create digital visibility and drive results.” More »